Australian Carbon Tax: Big Coal Isn't Scared

Australian Prime Minister Julia Gillard Carbon Tax
Stefan Postles/Getty Images
Australian Prime Minister Julia Gillard announces the Carbon Tax plan at Parliment House in Canberra, Australia.
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On Sunday, Australian Prime Minister Julia Gillard introduced a plan to make Oz the first nation to put a price on carbon pollution.  In a world sorely lacking for signs that political leaders are taking the threat of global warming seriously, it is big news – especially given the fact that Australia has the largest per-capita carbon footprint in the world.  The plan, which is expected to pass both houses of parliament before the end of the year, would require the nation’s 500 biggest CO2 emitters to pay a tax of $24 per ton of carbon dioxide, with that price increasing by 2.5 percent each year until 2015, when the tax will end and an emissions-trading scheme will be introduced. By 2050, Gillard's plan will reduce emissions by 80 percent and channel about $10 billion into energy efficiency and renewable energy projects. "I  want people to understand we are seizing a clean energy future," Gillard said.

To subvert Gillard's plan, Australia's fossil fuel mafia worked overtime to spread the usual message of economic gloom and doom. Australia, after all, is the world's largest exporter of coal and iron ore, and so a carbon tax would be expected to hit hard.  Australian opposition leader Tony Abbott, who has labored tirelessly to undercut action on climate change, marched up to Queensland, the heart of Australia's coal country, to pose in front of a giant mining machine and tell Australians he would continue to oppose the tax on behalf of a beleaguered coal industry. Barnaby Joyce, a senator for Queensland and longtime coal booster, told a reporter that "this crazy carbon tax would send us back to the Dark Ages and we'd all be riding ponies."

But truth be told, Big Coal didn't seem all that freaked out about Gillard's plan.  In fact, the very day Abbott and others were preaching economic decline, Peabody Energy, the world's largest privately held coal company, was negotiating the final details on a $5 billion takeover of Macarthur Coal, a major Australian coal mining company.

As far as I can tell, there are two likely explanations for why a company like Peabody would make a $5 billion deal at precisely the moment a carbon tax is announced: either Peabody executives are very stupid and don't understand the impact that a modest carbon tax will have on the future of their industry.  Or they believe that the tales of economic gloom and doom are bullshit, and that, even with a modest price on carbon in Oz, the world is going to continue burning a whole lot of black rocks.

For climate activists, explanation number two is not good news.  Because the only scenario more frightening than going back to riding ponies in the Dark Ages is a future in which even bold political action has zero impact on the world's appetite for coal.